Needham & Company Starts Palo Alto Networks (PANW) at Buy; Next Generation Firewall to Drive Growth

March 27, 2013 7:41 AM EDT
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Price: $142.11 +0.13%

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Needham & Company initiated coverage on Palo Alto Networks (NYSE: PANW) Wednesday with a Buy rating and $70 price target.

Analyst ScottZeller notes "next generation firewall" (NGFW) is a key growth area, despite being part of the mature, well-defined network security market. They estimate the NGFW market pulls budget from a TAM composed of other adjacent security categories (legacy) and is approximately $6.2B in CY11, growing to $9.0B in 2016 (CAGR 8% 2011-2016 - Gartner).

Palo Alto Networks also address new challenges for IT and business executives created by virtualization (and software defined networking), increased mobility (and BYOD), and a need to "work with" new applications (LinkedIn, Skype).

"We believe the Next Gen Firewall from Palo Alto can help address (1) the need to adopt applications but "turn off" risky functions (e.g., chat); (2) the increase in advanced persistent threat (APT) and other attacks calling for greater application awareness; (3) the rise of mobility and BYOD, creating more entry points into the enterprise; and (4) the rise of virtualization and SDN, creating network complexity and greater security risk," Zeller said.

For an analyst ratings summary and ratings history on Palo Alto Networks click here. For more ratings news on Palo Alto Networks click here.

Shares of Palo Alto Networks closed at $53.98 yesterday.

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